Real Estate Vs GOLD

Just because investing in real estate may be an unfamiliar investment vehicle, doesn’t mean it should be avoided. If approached correctly, a real estate investment can be a profitable and reliable investment opportunity to generate substantial returns. It can create a regular income flow while supplementing your portfolio with exceptional benefits such as tax advantage, diversification, and a less risky investment choice.

On the other side, there are numerous reasons why people, especially Indians, prefer gold as an investment vehicle. Many families in India treasure gold for ages passing it from one generation to other as a mean of an asset. The top benefit of investing in gold is that your investment is very flexible. You can purchase 1 gram, 5 grams, 10 grams or any amount of gold depending upon the amount of money you have to invest. So basically, the gold investment can start from a few thousand of rupees to lakhs and crores depending on your investment appetite.

Difference Between Real Estate Versus Gold Size of investment-

Real Estate: The investment size is huge in the case of real estate. The land as a limited resource, has a growing demand with exponential prices. To invest in real estate, you need a lump sum amount to pay as a down payment, and it involves debt financing. The size of investment wholly depends on your investment appetite.

Gold: You can start buying as low as 1 gram of gold. It is advisable to invest in gold coins or gold bullion than gold jewellery as the jewellery is subject to additional making charges.

Tenure

Real estate investment is ideal for a long-term investment.

Gold: You can hold gold for short as well as long-term. However, investing in gold for long-term can give a higher rate of return.

Earning Potential

Real estate is one of the best ways to produce a regular monthly income in the form of liquid cash. A rental property can get a monthly rent and the part of which can be used to pay the mortgage. The returns fluctuate with the market.

Gold If the price of gold drops, the investment value also goes down.

Liquidity

Real estate offers less liquidity as compared to gold. Selling off your property could require a number of days or even months. It involves paperwork and stamp duty while selling the property, which makes the process lengthy and complex.

Gold Buying and selling gold is a simple process. Gold is a very liquid asset and can be encashed at any point in time with no formalities.

Volatility

Real estate is subject to low volatility as compared to gold and other investment options.

Gold is more volatile than real estate. The value of gold changes almost every day.

Tax Benefits

Real estate has structured tax benefits. There is depreciation, mortgage tax deduction, cost of repairs and maintenance and cost of legal services are considered while calculating the tax.

Gold attracts capital gains tax. Additionally, any profit made in the case of gold deposit certificates is fully exempted from taxation.

Transparency in Prices

Real estate prices might not be as transparent as the gold. Also, the past data may not be readily available while dealing with real estate.

Gold is actively traded in the market. The price of gold coins and bullions are quite transparent.

Returns in Real Estate versus Gold Investment

Real Estate The history says that real estate has given on an average 8 percent returns and can go up to 15 percent or more. Despite the growth in rentals, the rental yield in India is around 7 to 9 percent which is lower than other investment options. However, if you look at the other side of the coin, real estate can produce regular monthly income which a gold investment cannot. The real estate can be an attractive long-term investment option where the property value increases over time. Real estate provides better returns than gold without much volatility. Additionally, when the market improves, so does the value of your property. It is wise to include real estate as a part of your overall wealth creation strategy.

Gold investment is worthwhile as it gives inflation beating results. Over a period of time, returns from the gold investment are in line with the inflation rate. However, the dark side is when gold appreciates value, it is because there is a devaluation of the paper currency. Hence, returns become nominal in the case of gold investment.

Why Invest in Real Estate?

A real estate opens up as a wiser option because of the following reasons.

Low Volatility: Real estate property is a stable investment option as compared to gold. Also, owning a house means you are ensuring a secure future.

The Expenses Add Value: The value of the property can be increased through repairs and renovations. Unlike gold, the property can be altered as per your convenience.

Lease it Out: Even if you are using the property, you can always lease it out to produce a regular income. Rental returns are an excellent option for generating a positive cash flow. You can also mortgage the property against a loan.

The value of real estate will always increase over time: The longer you hold onto your real estate property, the more value you are likely to get.

The investment in real estate comes with numerous tax benefits such as tax deduction on mortgage interest, operating expenses and legal costs, property taxes and depreciation. The real estate investment is not only a safe investment but can generate better returns over a period of time while you are still earning a regular income if you are using it as a rental property. It is a great investment option for many reasons such as fantastic tax advantage, and you can leverage it to build wealth.

Why Invest in Gold?

There are various reasons why people prefer investing their money in gold over other investment options. Below are the reasons to own gold over other investment choices.

Holding its Value: Unlike paper currency, the gold has maintained its value throughout ages. People look upon gold as a way to pass on and maintain their wealth from one generation to other.

Hedge Against Inflation: Gold has proven to be an excellent hedge against inflation because the price of gold tends to rise with the rise in the cost of living.

Portfolio diversification: The purpose of portfolio diversification is finding investments that are not closely related to one another. Gold has a historically negative correlation with stocks and mutual funds. So, it turns out to be the diversification instrument in your portfolio.

Gold has no Counterparty Risk: In the case of gold, there is no legal formality or a paper contract to make it valid. There is no need for an intermediary to fulfil the contractual obligations.

Liquidity and Portability: Gold investments especially, gold coins and gold bullions are ideal because they are the portable and highly liquid investment. You can carry gold anywhere in the world and can sell in any corner of the world within minutes.

No Maintenance and Carrying Costs: Unlike real estate, gold doesn’t need maintenance. You can simply lock it until you need it.

Additionally, gold is a value dense. You may carry lakhs of rupees of gold in your home without paying a carrying cost.

To know more about Real Estate VS GOLD, kindly contact Jayant Harde on 9373284136 or +91 7122282029. You can also visit our website: www.jayantharde.com